Goldman Sachs: The largest buyer has returned to the market and hundreds of billions of ammunition will help U.S. stocks survive May and June

Goldman Sachs: The largest buyer has returned to the market. Hundreds of billions of ammunition will help U.S. stocks survive May and June. Source: Wall Street Insights Zhao Ying. Goldman Sachs reported that U.S. companies are expected to repurchase US$934 billion in stocks this year, an increase of 13% from last year. Of which One-sixth of approximately 155.5 billion buybacks are expected to be executed in May and June.
After the Federal Reserve signaled that it is prepared to keep interest rates high for a long time, investors are counting on large-scale buybacks by U.S. companies to support the trend of U.S. stocks.
On Wednesday, Goldman Sachs pointed out that as the largest buyers of U.S. stocks, U.S. companies have returned to the market and are expected to drive the next stage of the rise in U.S. stocks.
Goldman Sachs strategist Scott Rubner pointed out in a report to clients that U.S. companies are expected to repurchase US$934 billion in stocks this year, an increase of 13% from last year. One-sixth of this, about 155.5 billion, is expected to be repurchased in May and June. Monthly execution.
Rubner further pointed out that so far this year, more than $550 billion worth of repurchases have been authorized in U.S. stocks, the third highest on record. Compared with the same period last year, the volume of completed repurchases in the first quarter increased by 21%.
Technology giants are the most active in this year\’s wave of corporate buybacks: Apple announced last week that its board of directors approved a $110 billion stock buyback, becoming the largest stock buyback in U.S. history. It drove Apple\’s stock price to rise nearly 4% in a single day, setting a record Biggest one-day gain in 18 months.
Previously, Google parent company Alphabet launched a US$70 billion buyback plan. Meta also launched a US$50 billion buyback plan.
Goldman Sachs analyst Vani Ranganath added: Last week alone, 46 share repurchase plans were authorized, with a total value of $144.5 billion.
Goldman Sachs\’ trading desk volume last week was 1.4 times the average daily volume so far in 2023. Compared with the same period in 2022, last week\’s volume was 70% of that. Trading was skewed towards financials, industrials and consumer discretionary.
As companies enter the open trading window period after releasing financial reports, the buyback wave may become more fierce. Goldman Sachs pointed out that approximately 92% of companies will be in the open trading window period this week. The buyback wave is expected to continue until June 14.
It is worth mentioning that analysis points out that buybacks often act as shock absorbers. Since companies have hoarded trillions of cash, the possibility of a collapse is very small.
Buybacks will also provide enough impetus to push the stock market to new highs in the short term.
In addition, in addition to the buyback factor, Rubner also cited many other bullish factors, including that momentum traders and retail investors preparing to buy stocks will become more active in the summer.
Commodity Trading Advisors (CTAs) take advantage of momentum in asset prices by making long and short bets in the futures market. Their models predict that CTAs will buy stocks next week regardless of which way the market moves.
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